One of the largest obstacles to buying a home is the down payment. Most loan programs require at least 3% down to ensure you have money invested in the house and the bank isn’t taking all the risk.Verify your mortgage eligibility (Feb 1st, 2023)
However, saving for a down payment can be hard. If you have the income and credit to qualify for a mortgage but struggle to save the down payment, the Freddie Mac BorrowSmart program may help you own a home sooner.
What is Freddie Mac BorrowSmart?
Freddie Mac BorrowSmart is a down payment assistance program for very low to low-income borrowers. Depending on their income, borrowers can get up to $2,500 in down payment or closing cost assistance.Verify your mortgage eligibility (Feb 1st, 2023)
How Much can you Get?
The amount of down payment assistance you can get depends on your location and income as follows:
- Borrowers with income 50% of the area’s median income may get up to $2,500 in assistance
- Borrowers with income higher than 50% but lower than 80% of the area’s median income can get up to $1,250 in assistance
- Borrowers with income higher than 80% of the area’s median income but less than 100% can get up to $1,000 in assistance
Who Qualifies?Verify your mortgage eligibility (Feb 1st, 2023)
To qualify for the Freddie Mac BorrowSmart program, you must meet the following:
- The home must be a primary residence
- The property must be located in an area that allows BorrowSmart
- All borrowers must undergo HUD counseling at their expense
In addition to the above qualifications, the following borrower requirements must be met:Verify your mortgage eligibility (Feb 1st, 2023)
- Borrowers must make a 3% down payment
The funds can come entirely from the BorrowSmart credit. However, if the credit isn’t enough to cover the 3%, the remaining funds must come from the borrower.
- Borrowers need a 620 credit score
The 620 credit score is to qualify borrowers for conventional financing with Freddie Mac. Lenders use all borrowers’ lowest middle credit scores to determine the qualifying credit
- Average debt-to-income ratio
Most lenders require a DTI of no more than 50% for the BorrowSmart program, but it can vary by lender. Ideally, have your debts paid down, so your percentage of committed debts
to income is low enough to make you eligible for the loan program.
- You can have owned a home before
Unlike other homebuyer assistance programs, you don’t have to be a first-time homebuyer for the Freddie Mac BorrowSmart program. You can have owned a home before, but if you
need assistance with the down payment and your income qualifies, you may be eligible.
The Freddie Mac BorrowSmart program increases your purchase power when you qualify to buy a home but don’t have enough money saved.
If you live in a BorrowSmart eligible state and your income falls within limits for your area, you can get help to have enough money to buy a home rather than making you wait. In today’s competitive environment, the BorrowSmart program can give you a leg up and help you buy a home faster while using conventional financing programs.Show me today's rates (Feb 1st, 2023)